View Full Version : What is your "enough" number?
When I read the billionaire thread, it reminded me of a conversation I had with a friend about money. She said that in her mind, if she had $2 million, that would be her "we have plenty of money" number. They have 3 kids and 4 grand kids that they help financially and I'm sure they would like to leave an inheritance as well. This prompted me to think of what my own number would be, that number that comes up when you think, "Yes, that would be more than enough." Dh and I don't have kids so our main concerns would be health care and assisted living costs when we're older.
Obviously, there are lots of other factors that come into play, primarily pensions, SS, Medicare, and inheritance for some. But if you had none of those other sources of income or resources, and had to rely solely on your saved funds, what would be your "enough" number? The dollar amount that you feel would be enough for you to stop working and retire comfortably, knowing that your financial needs would be met.
With an additional $500,000 tax free I could retire now.
iris lilies
3-2-20, 9:01pm
I will reply in generalities. Given the stock market of the past few days, I need to be prepared to lose half.
So here’s what I need in general:
Nursing Home costs: $800,000
$100,000 a year to go towards nursing home care for one of us x 8 years. That is $800,000.
My scenario doesn’t cover both of us being in a nursing home, that’s very unlikely, but if that does happen then that’s fine. We just exhaust our resources and go on the government dole.
General living costs: $1.8 million
$60,000 x 30 years
So, a total of $2.6 million. But that doesn’t cover any major loss in financial markets.
Ffortunately we have a pension and Social Security. We don’t have to rely entirely on our own saved assets.
That $60,000 annual living cost could be shrunk down quite a bit if needed, yet it is a fair amount lower than what we spend now.
I will reply in generalities. Given the stock market of the past few days, I need to be prepared to lose half.
So here’s what I need in general:
Nursing Home costs: $800,000
$100,000 a year to go towards nursing home care for one of us x 8 years. That is $800,000.
My scenario doesn’t cover both of us being in a nursing home, that’s very unlikely, but if that does happen then that’s fine. We just exhaust our resources and go on the government dole.
General living costs: $1.8 million
$60,000 x 30 years
So, a total of $2.6 million. But that doesn’t cover any major loss in financial markets.
Ffortunately we have a pension and Social Security. We don’t have to rely entirely on our own saved assets.
That $60,000 annual living cost could be shrunk down quite a bit if needed, yet it is a fair amount lower than what we spend now.
Ditto.
In college in the '80s, I thought the number was $2 million, for a family of 3-4.
Nowadays I'd put it at about the same, because I've figured out that I don't spend nearly as much as I thought I'd spend. Maybe round it up to $3 million to account for living in a high cost of living area such as my current spot.
I thought IL's answer was really interesting and it got me computing. Then I saw that the original question was aimed at pure savings, as though SS and pension and potential inheritances did not exist for the respondent.
But for me the only way to answer is to look at my actual situation, which includes ss and pension, and then planning for 30 more years which of course if really generous and it could be a lot shorter.
And then there is no way I could reach the numbers that IL and Gardnr and Bae say are "enough."
So I'm not sure what I am trying to come up with as a number, since at 63, there is no time left to come up with a great career that is going to let me save this money and up my various income streams.
I do like the idea of "enough" very much and that is actually my financial guiding principle. But I think I am defining "enough" differently, sort of enough to cover the basics as to food, shelter, ability to spend time with my family and do a certain number of fun things, support health that lets me do those things.
So not really sure as to number?
I thought IL's answer was really interesting and it got me computing. Then I saw that the original question was aimed at pure savings, as though SS and pension and potential inheritances did not exist for the respondent.
But for me the only way to answer is to look at my actual situation, which includes ss and pension, and then planning for 30 more years which of course if really generous and it could be a lot shorter.
And then there is no way I could reach the numbers that IL and Gardnr and Bae say are "enough."
So I'm not sure what I am trying to come up with as a number, since at 63, there is no time left to come up with a great career that is going to let me save this money and up my various income streams.
I do like the idea of "enough" very much and that is actually my financial guiding principle. But I think I am defining "enough" differently, sort of enough to cover the basics as to food, shelter, ability to spend time with my family and do a certain number of fun things, support health that lets me do those things.
So not really sure as to number?
My thoughts exactly. Is "enough" what I would like to have? What I need to have?
My thoughts go more philosophical because, like Tybee, looking at the 2M as "enough" is certainly not my number because it's an impossible number. I'm OK with that. I have set my personal expectations and my financial planning so that "enough" is exactly what I have. Given that I'm an independent contractor, I'm not looking at a number where I can finally ring the bell and live off the "enough"--my goals are like Tybee's--just enough to have the basics covered and be able to enjoy life in a simple way, which I will be able to do with streams of income like SS and supplemented with continued employment, be it part time, full time, or occasional.
iris lilies
3-3-20, 10:17am
I thought IL's answer was really interesting and it got me computing. Then I saw that the original question was aimed at pure savings, as though SS and pension and potential inheritances did not exist for the respondent.
But for me the only way to answer is to look at my actual situation, which includes ss and pension, and then planning for 30 more years which of course if really generous and it could be a lot shorter.
And then there is no way I could reach the numbers that IL and Gardnr and Bae say are "enough."
So I'm not sure what I am trying to come up with as a number, since at 63, there is no time left to come up with a great career that is going to let me save this money and up my various income streams.
I do like the idea of "enough" very much and that is actually my financial guiding principle. But I think I am defining "enough" differently, sort of enough to cover the basics as to food, shelter, ability to spend time with my family and do a certain number of fun things, support health that lets me do those things.
So not really sure as to number?
I use as a guiding principle: I don’t want to impoverish my spouse. If I have a debilitating stroke, I suppose I could live for a few years but I hope it doesn’t go on for eight years. In a nursing home my pension and Social Security would go to pay for that nursing home cost and I still need an extra $40,000 a year for it. That’s OK we have that kind of money. Our chief household income is tied to me.
But that scenario leaves DH only with his Social Security check which is not huge. He needs a certain amount in assets to draw down for living expenses. He knows how to live very simply, and he has excellent handyman skills he could work at into his late 70’s, but why should he? I also expect that in Hermann, there are quite a few handymen working at low wages. In St. Louis he could be busy 60 hours a week, but I doubt it to be true there.
I looked at 25 times my annual expenses as my "enough" number, and I have a little bit more than that as a buffer. That's assuming there's no social security, but of course since my spouse is 66, it clearly will be there for him when he files. I can cut back quite a bit should I have to, I also don't need to leave any inheritance because I have no kids, so there's always digging into principal should I need to. I think I have enough.
My expenses are quite low, so my total enough number is way less than other numbers being quoted.
iris lilies
3-3-20, 12:58pm
Officially, fully on the government teat this month because I am pulling Social Security income and also
Medicare.
I signed up for Social Security income a couple of months before my “full” retirement age of 66 because that’s what worked out best for us, taxwise. I didn’t want to do it in the last tax year and we wanted to get it over with before gardening season started because I don’t want to have to pay attention if things are set up correctly in the month of May when my birthday is.
Teacher Terry
3-3-20, 1:28pm
I am more like tybee and Catherine. We have 2 pensions, will have 2ss’s , savings and our house. My ex and I had close to a million saved when I left 22 years ago but he managed to hide all but 150k of it. I should have hired a PI before I left him to find it. Needless to say he is having a much fancier retirement than me.
Officially, fully on the government teat this month because I am pulling Social Security income and also
Medicare.
Congratulations!
But remember that you paid into both SS and Medicare. It is not free money. I was looking at my SS benefits/statement the other day and noted that I paid into SS over $200,000 over my lifetime of working so I won't feel guilty when I start "withdrawing" it at age 70.
Well, my thought was that pensions, SS and medicare do have a dollar value in terms of monthly income or benefit. So maybe a better question would have been what amount monthly or yearly is your enough? For some people, they will achieve that, or some of that, number via pensions, SS or what have you. Others will need to supplement with savings. If you receive medicare, you probably have a good idea of what that benefit would cost if you paid for it. But at the end, there is a number that makes you feel like you have enough.
Ok, so I will rephrase, what is the amount that allows you to live comfortably? Understanding that comfortable means different things to different people, and that how you arrive at that number will also be different. I think IL, bae and Gardnr understood what I was asking and why their answer is so high, but does reflect all of the income/benefits that they would want to feel comfortable. The reason I was saying exclude the benefits is because unless you do so, it doesn't really get at a real number. If I say, SS it doesn't tell you anything, but if I say $2,500, then it's clear what amount I'm working with, regardless of where it comes from. I hope that clarifies things.
Teacher Terry
3-3-20, 3:13pm
G, yes I didn’t comprehend what you were asking. Without any of my other income sources 1.5 million.
I looked at 25 times my annual expenses as my "enough" number, and I have a little bit more than that as a buffer. That's assuming there's no social security, but of course since my spouse is 66, it clearly will be there for him when he files. I can cut back quite a bit should I have to, I also don't need to leave any inheritance because I have no kids, so there's always digging into principal should I need to. I think I have enough.
My expenses are quite low, so my total enough number is way less than other numbers being quoted.
And is that pre or post tax on your salary?
A number of people here are already retired or close to it, so I thought it would be a good place to see what numbers people know have worked, or haven't. It seems a few of you are in the $60,000 per year ballpark for living expenses? Or $5,000 per month to include health insurance? At a 4% withdrawal rate that would be $1.5 - 1.8 million, depending on market fluctuations and time. And the extras like overseas travel and such are on top of that, plus if there are assisted living costs you would start drawing on your principal if need be, hence the extra buffer.
And is that pre or post tax on your salary
Hmmm that's a good question. I retired mid last year, so already had taxes taken out. Not sure what we will do going forward. My expense number didn't include taxes but it likely should have.
Around $1.5 million. In any case, since I'm retiring in a few months, that's what it's going to have to be!
I ran the numbers for estimated income on various retirement calculators, mostly the FIRE. And also kept a record of spending and educated guesses at future budgets. I had a couple of scenarios, one being worst case. I think I had a nest egg reserve for old age care of about 500k. Coincidentally, about when it was time to pull the plug my employer offered a severance package. I was 55.
It was during the financial crisis, so when it came down to it all the calculating was pretty worthless. None of my estimates would have included such low interest rates for so long and at a point I think my equities were down something like 30% or more. Re-balancing into equities when the market was really down helped. It's all worked out. I spend less than I'd anticipated and have always been a conservative investor and spender.
I ran the numbers for estimated income on various retirement calculators, mostly the FIRE. And also kept a record of spending and educated guesses at future budgets. I had a couple of scenarios, one being worst case. I think I had a nest egg reserve for old age care of about 500k. Coincidentally, about when it was time to pull the plug my employer offered a severance package. I was 55.
It was during the financial crisis, so when it came down to it all the calculating was pretty worthless. None of my estimates would have included such low interest rates for so long and at a point I think my equities were down something like 30% or more. Re-balancing into equities when the market was really down helped. It's all worked out. I spend less than I'd anticipated and have always been a conservative investor and spender.
Rogar - was the $500k in addition to other sources of income/benefits like SS, pension, medicare?
So it looks like quite a few of you have found $1.5 million, or $5,000 per month, to be the magic number. Isn't it interesting to think of how much benefit we get from SS, medicare and pensions over our lifetime? Can you imagine having to come up with $1.5 million before you can retire?
Can you imagine having to come up with $1.5 million before you could retire?
Well, yes I can imagine since we did it. We gave up a lot (by the Jones' lifestyle). We paid off debt AFTER paying ourselves first and we paid our debt in an aggressive manner before spending on any extras. It was decades of monthly cost-averaging and the first 15 years it grows very slowly.
I have our net assets tracked back to 1996. It has taken 24 years to grow it 13X that "starting point". And we started back in 1987!
It sucked for awhile until we garnered solid control of our spending habits and became goal driven. And then it took until 2010 to become permanently debt free, paying cash for EVERYTHING!
If we had been well-educated on money back when we got married in 1980, the road would have been much easier and the waste would have resulted in a much earlier achievement of success. But I am grateful we learned by the time we were 26!
Well, yes I can imagine since we did it. We gave up a lot (by the Jones' lifestyle). We paid off debt AFTER paying ourselves first and we paid our debt in an aggressive manner before spending on any extras. It was decades of monthly cost-averaging and the first 15 years it grows very slowly.
I have our net assets tracked back to 1996. It has taken 24 years to grow it 13X that "starting point". And we started back in 1987!
It sucked for awhile until we garnered solid control of our spending habits and became goal driven. And then it took until 2010 to become permanently debt free, paying cash for EVERYTHING!
If we had been well-educated on money back when we got married in 1980, the road would have been much easier and the waste would have resulted in a much earlier achievement of success. But I am grateful we learned by the time we were 26!
Wow. Just wow. Congratulations.
wildflower3
3-5-20, 4:11pm
Intriguing thread. Being NOWHERE near retirement myself, it's definitely something that's still on my mind. My dad retired a few years ago and my mom just retired a few weeks ago. I've definitely tried to keep an open ear when she talks about how she's managed their money and retirement plans and have used little online projections and calculators to get an idea of where I'm at, where I should be, etc. My parents have put off receiving my dad's social security so that he'll receive more per month, and I believe they'll start getting it sometime this year (he just turned 70).
I do not have social security; I used to work in local government but they were on a county retirement system, however I wasn't there long enough for it to do much. I feel pretty 'on my own' in preparing for retirement (even though it's ~35 years away) in the sense of needing to save it all myself, and definitely utilize any matching my employers do for IRAs and such!
As I started paying closer attention maybe 6 months ago and perusing more online resources than before, I generally decided 2 million by retirement at ~67 years old for myself. I'm currently on track for that from what I can tell. 3 million would be even better to have more cushion in case of extra health issues I guess?
My boyfriend should have some sort of retirement through his employer (also local government) though I can't recall what, and obviously we aren't married (fingers crossed though lol) so I try to be practical and be prepared for providing for myself, should things ever not work out.
I am definitely trying to be good about 'paying myself first' and it's part of why I'm happy about the house we hope to buy - it would allow us to live very decently within our means, despite needing some updates and being far from exciting.
Rogar - was the $500k in addition to other sources of income/benefits like SS, pension, medicare?
No. It was just $500k outright in savings. Of all my calculating, that number was more of a swag than other budget estimates from income or spending. If and when the time comes I'll have other common incomes from SS, a small pension and what ever medicare might pay. I'd say it's more of a sleep comfortably at night figure. I watched my parents spend down their savings and assets to become eligible for Medicaid once they both were in long term care facilities, and it was an uncomfortable situation. Maybe it will allow more home health care rather than being subject to institutional care and an alternate to long term health insurance. It's pretty much of an unknown I suppose.
For the record my savings at retirement was less than the common $1 million number, plus a pension of about $15k a year and 50% of health insurance paid by previous employer until Medicare kicks in. House paid off.
Teacher Terry
3-5-20, 5:13pm
Wildflower, it’s great that you are saving for retirement when young.
wildflower3
3-5-20, 5:23pm
Wildflower, it’s great that you are saving for retirement when young.
I'm certainly trying! I'd like us to buy this house, live in it for 10+ years and slowly save towards another downpayment. It'd be great if we could then buy something a little nicer and rent this house out, but that's too far out to really have any real idea.
Another goal is to work at a place that would get me vested and able to have retirement health insurance - my mom went back to the state for a year doing a crap little student job unrelated to her career, just to add some time working there to end up with the health insurance.
For those not yet retired, are there any simple online resources you like using to gauge where you are at and get a general prediction of your retirement situation, such as calculators, projections, etc that don't require an account? My Transamerica account offers simplified projections for example, but wouldn't be helpful to someone without an account. Chris Hogan, Dave Ramsey, Suze Orman, etc resources?
So it looks like quite a few of you have found $1.5 million, or $5,000 per month, to be the magic number.
Wow! I certainly hope that is not the "standard". Nowhere close to $5,000 per month as a working household, let alone thinking of retiring with that much.
I don't think this is the thread for me to participate in - LOL!
Congrats to all of you who have "made it". Enjoy!
Happystuff, My humble opinion is that you should run your own numbers and maybe use a retirement calculator. Not everyone has the same lifestyle and it's a good way to get a handle on budget and income streams. I am still on the experimental stage of SS payments, but with no debt I'm pretty sure I could live on SS plus about $10k per year plus a nest egg for things like new furnaces or car replacements.
Having no debt and bridging the gap between early retirement and then SS and medicare are the big issues. As a single person I think the 1.5/5000 magic number is pretty much in excess of my middle class needs. Having a partner could be better or worse depending on any additional income streams, but there are also some synergies in spending.
Teacher Terry
3-5-20, 6:43pm
Happy, one of the biggest expenses can be traveling if you enjoy it. The years we travel we have spent between 4-15k/year just on travel. No regrets as the day will come when one of us can’t.
Wow! I certainly hope that is not the "standard". Nowhere close to $5,000 per month as a working household, let alone thinking of retiring with that much.
I don't think this is the thread for me to participate in - LOL!
Congrats to all of you who have "made it". Enjoy!
I don't have that as a working household, either. Our social security will be much smaller, too, and I had to take it this year as work dried up.
We will be working as long as we can.
Same with me Tybee. The figure is high to me even for a couple.
Same here. My MIL retired with a small pension and SS--her monthly income from those sources was just over $3000k. She lived off of that. She had paid off everything and had no debt. She had a small next egg, under 200k. She didn't lack for anything, the way I could see it. She was the stereotypical frugal Scotswoman.
I think knowing she was able to live a nice life with far less than 1.5M gives me reassurance and hope.
Not everyone has the same lifestyle and it's a good way to get a handle on budget and income streams. I am still on the experimental stage of SS payments, but with no debt I'm pretty sure I could live on SS plus about $10k per year plus a nest egg for things like new furnaces or car replacements.
Interesting research paper recently that suggests the traditional advice for planning for a high steady retirement income is unnecessary for many folks (and why that's so). The paper itself, of course, is jargon-laden. The Bogleheads thread (https://www.bogleheads.org/forum/viewtopic.php?f=10&t=305836&newpost=5065281) discussing it uses far more plain English.
Wow! I certainly hope that is not the "standard". Nowhere close to $5,000 per month as a working household, let alone thinking of retiring with that much.
Exactly. When I posted above that I thought a particular retirement calculator was too simplistic to be of much use I was thinking about myself. But my thought probably also applies to you, and any number of other people. Everyone's situation is unique. For me the uniqueness is that I'm part of a high earning couple but we don't own a home and don't plan to buy one before retirement. (curiously my parents ended up doing the same.) If you, happystuff, live in a lower cost of living place, and/or will have your home paid off by retirement, and/or perhaps aren't big travelers or spenders on other pricey stuff, then yeah, $5k per month is probably way more than you need. It really is an individual (or couple)'s thing depending on their own circumstances.
Personally my enough number is somewhere close to $2M but there are a lot of variables that can change that. If I work until 67 that number is probably high. If I hit that number at 57 then it's probably low. If the incessant attempts to end the ACA end up being successful (and it doesn't get replaced by something better) I will probably have to work until 65 regardless, which again changes things. Since I can't predict the future I will continue to work and save and re-evaluate until I hit a point where I'm ready to pull the trigger and stop working full time paid employment.
I'm certainly trying! I'd like us to buy this house, live in it for 10+ years and slowly save towards another downpayment. It'd be great if we could then buy something a little nicer and rent this house out, but that's too far out to really have any real idea.
Another goal is to work at a place that would get me vested and able to have retirement health insurance - my mom went back to the state for a year doing a crap little student job unrelated to her career, just to add some time working there to end up with the health insurance.
For those not yet retired, are there any simple online resources you like using to gauge where you are at and get a general prediction of your retirement situation, such as calculators, projections, etc that don't require an account? My Transamerica account offers simplified projections for example, but wouldn't be helpful to someone without an account. Chris Hogan, Dave Ramsey, Suze Orman, etc resources?
Wildflower: I am retired and I had used a retirement calculator that my employer had on our benefits site, but I hear a lot of people speak highly of Firecalc as an online calculator. Maybe someone who has used Firecalc can weigh in.
I liked using specific budget and income projections, but I think a good ballpark starting point is using a person's working income and adjusting it for a non-working person needs. For example, in my working days I was maxing out 401K contributions for tax and employer matching reasons and adding money to my mortgage payments to pay off my house early. Social Security deductions from pay checks, etc. No more work wardrobe or commuting expenses. Ballpark would have put me at half or less of my working income needs with just those few things. There might be some add backs like travel or health expenses.
A few of my co-workers took early retirement at the same time as I did and we stay in touch. It's a common comment that their income needs are less than they'd anticipated.
Thanks for all the additional input/discussion. I realize that it is definitely individual-based. I have 8 more years 'til 70 and max SS, so - at this point in time - that is the retirement goal. I'm thinking I am more like catherine's MIL - minus a pension. But, that said, I doubt I would change much career-wise through the years. The career choices I made were the best possible at the time of their making and no regrets. I'm definitely trying to look at and enjoy the journey instead of total focus ahead.
iris lilies
3-6-20, 9:26am
I said this above but it might’ve gotten lost in the projections of building a stash.
Our household income is strong when we turn on spigots that we are entitled to. It pretty much covers our expenses, probably not including an annual blowout vacation. Or a new vehicle.
My concern is impoverishing my spouse.
Because the big part of our income is tied to me, if I die or go into a nursing home there has to be something for him to live on besides his Social Security income. Hence, our concentration on building assets beyond income.
it’s funny that people assume that DH made more money than me in our household, he had his own business. That is not true I always made 2x to 3x his income. He added great value to our household though because he could build anything, he kept everything running. I remember once he fixed our washing machine for literally a $.25 part. Anyone else would’ve had $120 service call.Plus, when we got married he had $100,000 net worth which back then was a shit ton of money. He had gotten there through savings and rental income while he lived on the family farm and helped there.
Your DH is just like mine, IL.. Although he did bring in some income until about 10 yrs ago, I have brought home the bacon but HE has fried it up in the pan. He also has a mechanical mind and can figure things out and has definitely saved us service calls. He's my social half. If it weren't for him I'd have no friends. He is an avid and excellent cook. He was home when I was out to work and traveling and took care of the kids. ("See you at 3:15!" is still a catch-phrase in our house--what he would tell them when they left for school in the morning)
You have made me think more deeply about this. Unfortunately I haven't thought much about it because, frankly, the expectation is that I will outlive him. But what if that's not the case? I have not planned well for that inevitability. Thank you--I'll have to think about this..
iris lilies
3-6-20, 10:06am
Your DH is just like mine, IL.. Although he did bring in some income until about 10 yrs ago, I have brought home the bacon but HE has fried it up in the pan. He also has a mechanical mind and can figure things out and has definitely saved us service calls. He's my social half. If it weren't for him I'd have no friends. He is an avid and excellent cook. He was home when I was out to work and traveling and took care of the kids. ("See you at 3:15!" is still a catch-phrase in our house--what he would tell them when they left for school in the morning)
You have made me think more deeply about this. Unfortunately I haven't thought much about it because, frankly, the expectation is that I will outlive him. But what if that's not the case? I have not planned well for that inevitability. Thank you--I'll have to think about this..
About the spouse thing: it was a relief to me, in one aspect, when my father died because then my mother’s assets could be spent solely on her. Their end of life scenario went like they expected: my dad died first, my mom lived some years alone, then she went to a nursing home which sucked up assets but not all of them because she had nursing home insurance that covered a lot of her bill for 5 years. That was the scenario they planned for.
In another instance, one of my friends whose father lives in a nursing home and has no money left asked sincerely, why try to build assets for nursing home care when Nanny Govmnt will cover it? The answer is : because your spouse needs money.
When most of your joint assets go to a nursing home, the remaining spouse is SOL. The last time I checked, years ago now, Nanny Gubmnt allowed the remaining spouse to keep $80,000 plus any primary residence, the rest is confiscated to pay the nursing home bill. That $80,000 is peanuts.It insults me.
When most of your joint assets go to a nursing home, the remaining spouse is SOL. The last time I checked, years ago now, Nanny Gubmnt allowed the remaining spouse to keep $80,000 plus any primary residence, the rest is confiscated to pay the nursing home bill. That $80,000 is peanuts.It insults me.
An unpleasant fact of life I've gone through with parents. Plus, as I remember it, when both spouses are gone they can come after what ever is left in the estate. Insult to injury.
iris lilies
3-6-20, 10:24am
An unpleasant fact of life I've gone through with parents. Plus, as I remember it, when both spouses are gone they can come after what ever is left in the estate. Insult to injury.
yes! An unpleasant surprise for more than one family who has had mom or dad hang on to their family home “ to leave a legacy for the kids.”
Nursing/assisted care is definitely part of what is making us want to save way more than we think we need. And health care. Right now we live on $2,500 per month, give or take a few hundred depending on how frugal or spendy we're being.
But, our health insurance is paid for by dh's work. This year we're not paying any monthly premiums, we have no deductible, the co-pays are reasonable and prescription costs are very low. I pay $10 for a 3-month supply of metformin for my diabetes, and all the testing stuff (meter, strips, lancets, etc) are all free. We're not eligible for medicare for another 15-16 years. In 2007 it cost us $1,100 per month for medical insurance (dental and vision not included).
Since we don't know what's going to happen with health care - will the ACA be eliminated? will pre-existing conditions make it impossible to get coverage like it used to? will having pre-existing conditions make insurance costs skyrocket? I have several pre-existing conditions. Right now our medical costs are so low, they're practically zero. Dental coverage is excellent; I can't remember the last time I paid anything. But I anticipate that with age, dental expenses are going to come up. Dh had a dental implant a few years ago that was in the thousands even with our coverage. So right now we're adding $2,000 to our projected budget for living expenses just for health insurance costs; which honestly, might even be low. That would bring our living expenses to $4,500 per month immediately. All of a sudden, $5,000 per month doesn't seem that high at all.
When most of your joint assets go to a nursing home, the remaining spouse is SOL. The last time I checked, years ago now, Nanny Gubmnt allowed the remaining spouse to keep $80,000 plus any primary residence, the rest is confiscated to pay the nursing home bill. That $80,000 is peanuts.It insults me.
DH's best friend's parents got divorced when they were older just to de-couple them from the prospect of having to drain assets to qualify for long-term care.
AND... the reason our family lost the cottage I spent my summers at when my great-aunt died was because her sister was in a nursing home and inherited the house. My mother had to sell the cottage because supposedly the State reclaimed the asset for my grandmother's care. At least that's what my mother said. It was heartbreaking--my aunt had begged my mother to go with her to change her will, but it never happened.
Yet another real estate disaster in my long history of them.
Right now we live on $2,500 per month, give or take a few hundred depending on how frugal or spendy we're being.
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I think that is great! I wish we did-- I think this is key, to get our monthly "needs" spending under control.
I can't worry about somehow magically saving an extra 2000 a month for medical and nursing care needs, as that is not going to happen.
But I can work on getting our spending down to 2500 a month. Again, well done!
I think that is great! I wish we did-- I think this is key, to get our monthly "needs" spending under control.
I can't worry about somehow magically saving an extra 2000 a month for medical and nursing care needs, as that is not going to happen.
But I can work on getting our spending down to 2500 a month. Again, well done!
I agree! $2500 is great! Gella, can you give us a ballpark on the breakout between "needs" and "discretionary" spending? I also have to work on getting my monthly nut down.
The bottom line here is: Save what you can and live on what you have. No one's formula applies to everyone as we all have different needs, wants and incomes during our earning/saving years.
I know no one who earned what I did give/take 25% who lived on 30% and saved every penny after taxes hitting debt free before 50 w/2 small homes and no mcmansion. That's how I retired at 58 and they will work another 10+ years.
My older sister "retired" at 65, rents a bedroom from her son and provides daycare for their daughter who is now 4 and she is exhausted. It was supposed to be just 2 years. Honestly, she can't live on her own financially. She "let" the 2nd EX to spend a whole lot of money as well as making a poor housing choice that did not pay off when sold during the divorce process. Prior to this arrangement, she was in the San Diego area and couldn't afford rent when her adult daughter moved out (they did a 2y lease together when daughter returned from teaching abroad). So sad.
Teacher Terry
3-6-20, 2:00pm
So our monthly needs are 2587. We budget 150 each for our personal money and 300/month for joint fun money. This includes eating out, festivals, concerts, etc.
So our monthly needs are 2587. We budget 150 each for our personal money and 300/month for joint fun money. This includes eating out, festivals, concerts, etc.
Impressive! I don't even want to think about what we give up to get there. Concerts here are super spendy and we currently have tickets for 2 and I am going alone to a 3rd that didn't interest hubby.
Teacher Terry
3-6-20, 5:37pm
That doesn’t include vacations. We don’t take a big vacation every year but some years we take two. We also do a few 3 day trips during the year. The years we vacation we have spent anywhere between 4-15k. In the past we spent a fortune on vet bills. A friend of mine has pet insurance and has collected more than she has paid out. Since we finally have young dogs we have also bought it.
I do not trust either Biden or Trump to look out for me, to protect Social Security, or to control medical costs. In his SuperTuesday speech Biden"s big healthcare idea was let's end surprise billing. Not control costs, or limit ridiculous rates for out of network charges, not negotiate down exorbitant costs, only let you know what those costs will be so you are not surprised.
Due to medical I think I may spend more in retirement but have a more meager lifestyle, not that I am living large now.
I agree! $2500 is great! Gella, can you give us a ballpark on the breakout between "needs" and "discretionary" spending? I also have to work on getting my monthly nut down.
I'd say $2000, maybe less, is needs and the rest is discretionary spending.
About the spouse thing: it was a relief to me, in one aspect, when my father died because then my mother’s assets could be spent solely on her. Their end of life scenario went like they expected: my dad died first, my mom lived some years alone, then she went to a nursing home which sucked up assets but not all of them because she had nursing home insurance that covered a lot of her bill for 5 years. That was the scenario they planned for.
In another instance, one of my friends whose father lives in a nursing home and has no money left asked sincerely, why try to build assets for nursing home care when Nanny Govmnt will cover it? The answer is : because your spouse needs money.
When most of your joint assets go to a nursing home, the remaining spouse is SOL. The last time I checked, years ago now, Nanny Gubmnt allowed the remaining spouse to keep $80,000 plus any primary residence, the rest is confiscated to pay the nursing home bill. That $80,000 is peanuts.It insults me.
This has me thinking as well. If I get dementia or Alzheimer's, I made dh promise that he'll put me in a nursing home. I've somehow been thinking that SS and medicare would pay for that, but there's no way that it would cover all of it, not for any decent place. Three of our closest friends' parents have had Alzheimer's. Only one of them was able to care for her mother at home until the end, but she had to retire at 50 to do so; and she pretty much gave up her own life to care for her mother. We don't have any kids to help lighten the load.
iris lilies
3-6-20, 11:34pm
This has me thinking as well. If I get dementia or Alzheimer's, I made dh promise that he'll put me in a nursing home. I've somehow been thinking that SS and medicare would pay for that, but there's no way that it would cover all of it, not for any decent place. Three of our closest friends' parents have had Alzheimer's. Only one of them was able to care for her mother at home until the end, but she had to retire at 50 to do so; and she pretty much gave up her own life to care for her mother. We don't have any kids to help lighten the load.Medicare does not pay for long term nursing home care.
Medicare does not pay for long term nursing home care.
Yeah, I was just reading about that. And looking at the costs. I feel ill.
Is anyone buying long term care insurance?
The spouse is allowed to keep $126,420 in joint assets in California if medicaid pays for long term care.
Yeah, I was just reading about that. And looking at the costs. I feel ill.
Is anyone buying long term care insurance? The spouse is allowed to keep $126,420 in joint assets in California if medicaid pays for long term care.
We have elected not to purchase LTC. We consider our mountain cabin our LTC insurance. We can sell it. Our financial adviser concurs.
Teacher Terry
3-7-20, 12:44am
With a couple the spouse can keep the other one home for a long time. With planning the healthy spouse could apply for low income senior housing in advance if needed if you aren’t allowed to keep your home. However, I think in most states you can until the last spouse needs care or dies.
iris lilies
3-7-20, 1:27am
Yeah, I was just reading about that. And looking at the costs. I feel ill.
Is anyone buying long term care insurance?
The spouse is allowed to keep $126,420 in joint assets in California if medicaid pays for long term care.
I believe, anymore, the general consensus about long-term care insurance is that it’s not worth much. That seem to be the consensus on the Mr. Money mustache website. It was very useful for my mother, but she bought it in the 1980s and even then did not cover all of her nursing home bill. Also if you are over 50ish years old you’re just not gonna get it for any costs that you find reasonable.
No we did not purchase it and that was somewhat of a conscious decision and somewhat of an avoidance decision. But now we have enough money to cover it.
My dad is in a very nice assisted living home in a low cost of living area. It still cost around $50,000 a year. It’s goes to $8,000 a month if he needs more care. When he needs more care we will put him in the VA home as his SS and VA benefits will fully fund it. He won’t have a private room at the VA, and it has more of the look of a nursing home, but it’s nice enough. He has enough savings to stay at the assisted living place for around 10 years, With his Alzheimer’s he probably won’t be there that long. I’ll fund it if he does. My sister and I don’t expect a inheritance.
My wife and I do not have long term care or VA benefits, if needed we will just pay for long term care. If one of us needs it the other should probably downsize the house anyway. Long term care should not be that much more than we are spending now. I hope the kids put us in a nice place.
My number was the income stream amount that needed to be replaced, rather than a stash grand total amount. Current income sources include my pension, DH's pension, a small portion of our pre-tax accounts withdrawn annually, and DH's part-time job. I have my little side-gigs, but I treat those as extra, not baked into the budget.
DH would be eligible for another small pension when he hits 65 (really small) and we will both be eligible for SS (I'll actually be eligible this year, but don't plan to collect yet).
I was the higher earner, and I've always planned for the possibility of DH outliving me, although I know that is less likely than the reverse from an actuarial viewpoint.
We don't have LTC either. Well, I have one insurance policy which will pay the death benefit for LTC but would cover only a few months of a nursing home. Otherwise, the expense of it and the exclusions just didn't make it seem cost-effective for us, and neither of the financial planners we've used in the past few years have recommended that we get it. I guess our "cabin" is my rental property; we have not to date committed the proceeds from that (eventual) sale to any use in particular. We should have enough income to get us to FRA without it.
We don't have LTC either. Well, I have one insurance policy which will pay the death benefit for LTC but would cover only a few months of a nursing home. Otherwise, the expense of it and the exclusions just didn't make it seem cost-effective for us, and neither of the financial planners we've used in the past few years have recommended that we get it. I guess our "cabin" is my rental property; we have not to date committed the proceeds from that (eventual) sale to any use in particular. We should have enough income to get us to FRA without it.
Steve - what is FRA?
Steve - what is FRA?
Full Retirement Age.
With a couple the spouse can keep the other one home for a long time. With planning the healthy spouse could apply for low income senior housing in advance if needed if you aren’t allowed to keep your home. However, I think in most states you can until the last spouse needs care or dies.
Yes, the spouse can retain the primary residence, a sum of $132k, and income not to exceed $3110 per month. Everything else can be garnished, as well as the primary residence when the last living spouse dies. So if you can live on $3100 per month, with a $132k emergency fund, then you're ok. That's my understanding. Feel free to correct me if I'm missing something.
I saw that investment accounts are all subject to seizure but it looks like retirement accounts like 401k and IRAs are not? Is all of that protected? And what about income that you get from the retirement accounts - is it subject to seizure once your $3100/mo limit is reached?
p.s. Thanks Gardnr!
Teacher Terry
3-7-20, 6:52pm
I don’t know the answer to your questions but yes I could live on 3100 even with our 400 mortgage. For one person it’s totally doable. Some of our expenses would go down such as food, HI, cell phone, etc.
Yes, the spouse can retain the primary residence, a sum of $132k, and income not to exceed $3110 per month. Everything else can be garnished, as well as the primary residence when the last living spouse dies. So if you can live on $3100 per month, with a $132k emergency fund, then you're ok. That's my understanding. Feel free to correct me if I'm missing something.
I saw that investment accounts are all subject to seizure but it looks like retirement accounts like 401k and IRAs are not? Is all of that protected? And what about income that you get from the retirement accounts - is it subject to seizure once your $3100/mo limit is reached?
I could be corrected if I'm wrong, too, but I think Medicaid is administered by the states and the amounts will vary, although I think they are all in the same general range. Like I mentioned before, when the spouse living at home goes, they can come after the estate to recover Medicaid expenses incurred by the government. I've wondered about trusts and income from trusts. Somehow those are protected, but I can't recall the details. A few things to do a little web research. It's complicated.
I could be corrected if I'm wrong, too, but I think Medicaid is administered by the states and the amounts will vary, although I think they are all in the same general range. Like I mentioned before, when the spouse living at home goes, they can come after the estate to recover Medicaid expenses incurred by the government. I've wondered about trusts and income from trusts. Somehow those are protected, but I can't recall the details. A few things to do a little web research. It's complicated.
Yeah, it makes sense that at some point even the retirement funds would be seized. I'll need to research it. Also need to set up a trust for ourselves. I've known several people who died without trusts or wills and the probate process is a hassle for the family members who have to sort it out. The holdup with us is that we don't have kids and we both have very large families of origin, so deciding on beneficiaries and executors is not easy.
Yeah, it makes sense that at some point even the retirement funds would be seized. I'll need to research it. Also need to set up a trust for ourselves. I've known several people who died without trusts or wills and the probate process is a hassle for the family members who have to sort it out. The holdup with us is that we don't have kids and we both have very large families of origin, so deciding on beneficiaries and executors is not easy.
When making this decision, know that a WILL is a public document and anyone can request a copy from the courthouse. A TRUST is a private document known only to trustees and named individuals.
My youngest sister and oldest nephew are our trustees. They both consented "IF" all decisions were already made and all they have to do is execute-no decisions.
This is important because hubster is donating half our estate philanthropically, 1 nephew is receiving our cabin/contents and the funding to maintain for 15years-(he's just graduated college and the only person in the family near it and interested in the activities available there), and the rest goes to my philanthropic recipients. So lots of people could get pissed off.
Do spend the money to hire an estate attorney. It will give you the comfort that everything is clear and legally binding. I would not self-write a trust.
One thing about that "enough" number is realizing that you have to fit the pieces together of one's life choices and one's income, no matter where that income is coming in from.
So you may have to go back to work at some point when you thought you were retired, you may have to sell a house, you may have to regroup and do something different than you thought you would.
I guess it's always kind of in flux, depending on events outside of our control.
Unfortunately.
iris lilies
3-9-20, 4:37pm
I could be corrected if I'm wrong, too, but I think Medicaid is administered by the states and the amounts will vary, although I think they are all in the same general range. Like I mentioned before, when the spouse living at home goes, they can come after the estate to recover Medicaid expenses incurred by the government. I've wondered about trusts and income from trusts. Somehow those are protected, but I can't recall the details. A few things to do a little web research. It's complicated.
Agree that each state administers Medicaid and their policies for recovering nursing home expenses will vary by state.
Some years ago when I was reading up on it I learned that the state of Michigan did not carry out any look back searches. While wasn’t their actual policy on the books, it was their realistic practice. That meant that if I went into a nursing home and I deeded over my paid-for house to my daughter a week before hand, The state of Michigan never checked up on that. I don’t know if that still the case.
It is interesting that California, as Geila says, allows up to $3100 per month of income. I never considered that, I just assumed that my income is my income and DH’s income is his income. I do believe his retirement accounts are shielded from having to pay for my nursing home expenses, but I’m not so sure that his own nursing home expenses wouldn’t have to come out of his IRA.
So you may have to go back to work at some point when you thought you were retired, you may have to sell a house, you may have to regroup and do something different than you thought you would.
I guess it's always kind of in flux, depending on events outside of our control.
Sounds much like the way it was while we were working....
Teacher Terry
3-9-20, 11:45pm
I looked it up here and it the same as Geilia’s but there are a few caveat so it might be the same in California.
My (our) enough number is our annual budget / 3%, +$1M, which would provide an extra $30,000 in "play money" or reinvestment funds, and could be used for long term care if necessary. I feel I can probably count on a post-tax return of 3%, which would make this enough money to live on without ordinarily touching principal. Eventually I suppose I'll draw down principal as well, but I'd prefer to hold off on that as long as possible.
We should be eligible for SS and pensions as well, but I don't count on anyone's promises but my own.
It is interesting that California, as Geila says, allows up to $3100 per month of income. I never considered that, I just assumed that my income is my income and DH’s income is his income. I do believe his retirement accounts are shielded from having to pay for my nursing home expenses, but I’m not so sure that his own nursing home expenses wouldn’t have to come out of his IRA.
If I were to make a guess my guess would be that CA's rules, assuming that Geila is correct (and I have no reason to think she's not) is that CA is a community property state. If that's in fact how the rules she mentions come into play then there may also be wiggle in there depending on which spouse brought what assets into the marriage.
This is an interesting article about nursing homes and IRA's and how they are handled:
https://www.elderlawanswers.com/can-an-ira-affect-medicaid-eligibility-14544
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